It wasn’t a happy morning for investors, as some ropey data and fears over a pro-longed lockdown in the UK cut the legs from out under the markets.
In a rare sight, the FTSE and pound fell in tandem on Friday. The UK index dropped 0.7%, while sterling shed 0.4% against dollar and euro alike. And for good reason.
Just like in the US, the UK retail sales figures for December paint a pretty bleak picture. Instead of the 1.4% forecast, the reading came in at just 0.3%, alongside a downwards revision to November’s number, from -3.8% to -4.1%.
To top that off, a worse than expected public sector net borrowing figure helped take the national debt above £2 trillion for the first time.
It was one of those mornings where the markets got a reminder of Covid-past, and a glimpse into Covid-future, with Boris Johnson refusing to rule out lockdown extending all the way into the summer. And while it might be absurd to ask the Prime Minister where restrictions will be at in 6 months, the prospect of these measures being in place for a long time yet has understandably spooked investors.
With the euro making gains against the pound and dollar, the Eurozone indices were actually worse off than the FTSE. The DAX lost 140 points, or 1%, while the CAC tumbled 1.3%. The French index suffered as its own services PMI fell from 49.1 to 46.5.
Looking ahead and the buzz of the Biden administration seems to have quickly worn off for the Dow Jones. It’s heading for a 190 point plunge this afternoon, a decline that would once again knock it below 31,000.
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